Insurance is the worst disclosed area of superannuation, with insurance premium disclosure making it very difficult to compare superannuation funds.
That is the view of head of research of Chant West, Ian Fryer, who said fee disclosure, product disclosure statements (PDSs), and total and permanent disability definitions are so complex it is difficult to make insurance premium comparisons.
"There are still big problems with the way fees are disclosed. Some fees are disclosed before tax, some are after tax. Some include some fees or costs and some don't. It's not really a like-for-like comparison on fees," Fryer said.
"If you're trying to do that comparison, most people aren't going to realise so it looks like this fund's cheaper. Well they're not cheaper; they're just showing it before tax."
Fryer called for a review of how premiums are disclosed in PDSs, and believes there should be consistency on whether funds disclose premiums before tax or after tax.
Fryer said despite regulators making it clear on how fees and PDSs are disclosed, it is open to interpretation.
Also, since there are little or no rules on premium disclosure, and some products, individuals never see the premiums and cannot compare it to other funds.
Fryer said complex PDSs are eroding individuals' trust in insurance companies and products, as they believe companies are putting in conditions and caveats to get out of paying.
Fryer's comments come as Chant West released a 2014 superannuation fund insurance survey, which quantifies and compares the differences between fund premiums.
The survey used modelling to show the market competitiveness of each fund overall, and also by member occupation, gender, age and smoker status.
"Advisers can use the information in the survey tables to cut through all the obscurity and tell their client if the fund they're in represents good value for them and, if not, which other funds they might consider," Fryer said.
